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Southern Africa: Apartheid-Caused Debt
Southern Africa: Apartheid-Caused Debt
Date distributed (ymd): 990315
Document reposted by APIC
Region: Southern Africa
Issue Areas: +political/rights+ +economy/development+
This posting contains a press release and the statement by
Archbishop of Cape Town, the Most Revd Njongonkulu Ndungane,
on the Occasion Of the Launch of the Report "Apartheid-caused
Debt." It also contains excerpts from a summary of the report.
The full summary is available on-line at the web site of the
South Africa Jubilee 2000 campaign:
The full 100-page report is expected to be available soon on
the same site.
Media Conference, 11h00, 2nd March 1999, Bishopscourt
Apartheid-Caused Debt: The Role of Swiss & German Finance
The Apartheid regime used foreign credits as an opportunity to
postpone negotiations and to intensify its repression and war.
Those who supported the regime by providing foreign finance
are to be considered accomplices.
Apartheid's financial engineers managed, even in the most
politically turbulent years, to raise hundreds of millions of
Dollars for the Apartheid regime which was facing financial
and political bankruptcy. They also managed to engineer their
illegitimate dealings in such a way so as to shift the
economic consequences to the post-Apartheid state. The
democratic government's scope in financial policy has thus
been greatly limited.
Some Apartheid foreign debts are not listed in the official
- Heavy Rand-hedging losses of the SA Reserve Bank. Losses
incurred by the financial crisis of the Apartheid regime and
by sanctions-evading businesses have been nationalised and
shifted to the national budget of the new South Africa. It is
estimated that these losses imposed on South African
taxpayers amounted to 10% of the total central government
debt at the end of 1993. There is therefore an internal
government debt caused by foreign debts.
- Short-term gold-swaps and long-term gold loans, used by the
Apartheid regime to secure credits especially from 1985 to
1989. It seems that these gold loans were never registered by
the SA Reserve Bank as foreign debts, but more investigation
is required. It remains to be investigated whether South
Africa continued to export gold after 1994 in order to repay
Apartheid gold loans, and how significant these exports were.
The foreign debt of the Apartheid regime (in its narrow sense)
amounts to R50bn for 1993 (excluding the liabilities of the
SARB, trade credits, and direct and non-direct foreign
investments in the private sector). The Apartheid regime's
foreign debt more or less equals the initial investment
provided for in the Reconstruction & Development Programme.
Total Apartheid foreign debt (including public authorities
and public corporations; excluding shares) amounted to
R86.7bn in 1993.
From 1985 to 1993, interest and dividends worth an annual
average of US$3.1bn were transferred abroad. In order to pay
individual compensation to the victims of severe human rights
violations, US$0.5bn is needed. If foreign investors
renounced one sixth of those annual transfers, this would
suffice to pay compensation.
South African companies with foreign investments transferred
significantly more profits back to South Africa during the
period 1985 to 1990, the most repressive period under
Apartheid, and massively reduced repatriation of foreign
profits after the 1994 democratic transition. Is this
The economic costs to South Africa's neighbouring states for
conflicts relating to the abolition of Apartheid from 1980 to
1993 are estimated at US$115bn.
90% of the long-term Apartheid foreign debt in 1993 is owed to
four creditor countries of the Apartheid regime: the United
States, Germany, Switzerland, and the United Kingdom.
30 Major banks and 230 small creditor banks accepted a
proposal in 1986 to reschedule the foreign debt of the
Apartheid regime. A Technical Committee was formed,
presumably representing Apartheid's major creditor banks
- 3 German banks: Deutsche, Dresdner, Commerzbank.
- 3 Swiss banks: Credit Suisse, Union Bank of Switzerland,
Swiss Bank Corporation.
- 3 UK banks: Barclays, NatWest, Standard Chartered.
- 3 USA banks: Citibank, Manufacturers Hanover, Morgan
- 2 French banks were later added: Banque Indo-Suez, Credit
German capital was the most important financier of the
Apartheid's public sector, taken at 1993, with claims against
South Africa amounting to DM7.4bn. Gains made by their odious
business amount to an estimated DM8.4bn for the period 1971
to 1993 (excluding trade).
The Swiss financial centre was the second most important
financier of Apartheid's public authorities. Swiss business
relations with South Africa became increasingly important
towards the end days of Apartheid, but the investment zeal of
the Swiss business centre has been reduced to the level of
the 1970s since the democratic transition in South Africa.
Switzerland's importance to the Apartheid state climaxed in
1989, the same time as the climax of the anti-Apartheid
The Swiss parliament, as a result of pressure from the
International Campaign for Cancellation of the Apartheid
Debt, will tomorrow discuss whether to set up a "Truth
Commission" to further investigate Swiss banks' support for
the Apartheid regime.
The right to debt cancellation and fair procedures for debt
cancellation should be regulated internationally and no longer
left to arbitrary acts of individual settlements. This
applies to insolvency procedures for countries, the
cancellation of odious debts, and post-conflict countries. If
there is ever to be any hope of a successful international
sanctions campaign again, those financial institutions who
profited from supporting Apartheid repression can not continue
to be rewarded now for their odious profiteering.
Representing the International Campaign for the Cancellation
of Apartheid Debt:
Ms Mascha Madoerin, Co-author of the report, Switzerland
Representing Jubilee 2000 South Africa:
Archbishop Njongonkulu Ndungane, Patron of Jubilee 2000
Rev Dr Molefe Tsele, Chairperson of Jubilee 2000 SA
Mr George Dor, Jubilee 2000 SA Publicity Officer
Br Neville Gabriel, National Secretary of Jubilee 2000 SA
The report looks at how foreign financing of the Apartheid
regime, particularly by German and Swiss financiers, affected
political developments in South Africa, especially during the
critical 1980s. It deals with questions about the legitimacy
of the Apartheid foreign debt, and how the effects of
Apartheid-caused debt continues to seriously restrict South
Africa's economic sustainability in its efforts to meet
urgent social backlogs. The risks involved to South Africa's
foreign capital market arising from the campaign for debt
cancellation is addressed briefly. A strong call is made for
compensatory payments from those who profited from Apartheid
For more information contact:
George Dor, Jubilee 2000 SA Publicity Officer. Tel. 011 648
7000, E-mail: firstname.lastname@example.org
Aktion Finanzplatz Schweiz - Independent Network Monitoring
the Swiss Financial System, Drahtzugstr. 28, 4057 Basel,
Switzerland Tel: ++41 61 693 17 00 Fax: ++41 61 693 22 32
Statement by the Archbishop of Cape Town, the Most Revd
Njongonkulu Ndungane on the Occasion Of the Launch of the
Report "Apartheid-caused Debt"
at Bishopscourt, Tuesday March
It is my greatest pleasure to welcome you to Bishopscourt on
behalf of Jubilee 2000 South Africa, on the occasion of the
Launch of this Report: "Apartheid-Caused Debt : The Role of
German and Swiss Finance". We are extremely grateful to the
researchers and especially to Mascha Madorin who is here with
us and will no doubt share her findings that are contained in
The Report is mainly about German and Swiss Banks who
supported the Apartheid Regime so vigorously during the
darkest days of our history in South Africa during the 1980s.
The report further says that the Apartheid Regime used
foreign credits as an opportunity to postpone negotiations
and to intensify its repression and war. Those who supported
the regime by providing foreign finance are to be considered
accomplices. The author of the Report is alarmed by the
ability of the financial engineers of Apartheid who even in
the most critical years managed to raise hundreds of millions
of dollars for the Apartheid Regime which was then facing
financial and political bankruptcy; and to shift the
consequences thereof to the New Democratic Government thereby
creating enormous difficulties in its attempts to redress the
imbalances of the past.
There are some very revealing facts in the summary on Table 1,
the Foreign Debt of the Apartheid Regime which Mascha
describes as super-odious, and I am sure she will refer to
that in her presentation.
Our main objective is to target international financial
institutions which colluded under Apartheid which was
declared a crime against humanity. We want these companies to
make reparations through a massive capital injection plan
(some form of Marshall Plan) that will go towards education
and job creation.
To this end we are calling on the German and Swiss Churches,
the NGO's and all morally righteous and just people to
support our campaign for reparations from those financial
institutions that colluded with Apartheid as we face the
challenge of nation-building in a post- Apartheid era. I am
delighted to learn that the Swiss Parliament, as a result of
pressure from the International campaign for Cancellation of
the Apartheid Debt, will tomorrow discuss whether to set up
a "Truth Commission" to further investigate Swiss Banks'
support for the Apartheid Regime.
We sincerely hope that the Germans will follow suit.
APARTHEID CAUSED DEBT
The role of Swiss and German Finance
by Mascha Madoerin and Gottfried Wellmer
with a contribution by Martina Egli
Summary of the Research Document (excerpts)
This 100 page report was commissioned by the German and Swiss
Campaign Coalitions linked to the newly launched international
Campaign for Debt Cancellation and Reparations in Southern
Africa, and is published in English by Jubilee 2000 South
Africa. The paper is meant as one of several contributions
that have been published in the course of the last 18 months
on the issue of South Africa's foreign debts and the costs
which the Apartheid regime caused the neighboring states in
The research interest of the paper focuses on two fields:
Firstly, the authors intended to deal once more with the
question of how the issue of foreign financing of the
Apartheid regime affected the political development in South
Africa in the 80s. Two issues are in the forefront: The
legitimacy of foreign debt. The question of the long-term
effects of Apartheid-caused debt on the young democracy and
its economic sustainability. The controversial question of
the risks to South Africa's capital market arising from
the campaign for debt cancellation is also briefly discussed.
Secondly, the authors examine the role played by German and
Swiss financiers within the framework of foreign financing of
the Apartheid regime during the politically critical years.
A separate part of the paper deals with the issue of
reparations and demands compensatory payments from those who
profited from Apartheid. ...
After 1973 it became obvious that the colonial wars in South
Africa's neighbouring countries (Angola, Mozambique, Zimbabwe
and Namibia), which represented an actual cordon sanitaire for
the Apartheid regime, could not be won by the colonial powers.
The independence of Mozambique and Angola was imminent.
Large-scale workers strikes and the Soweto uprising of 1976
reflected the beginning of a new phase in South Africa's
political history. In this situation, the Apartheid regime
decided to embark on its "Total Strategy", which contained
comprehensive military, economic and home components serving
the single objective of safeguarding the regime. In the
implementation of this programme, the government, the
administration and public corporations played a decisive role.
The incredible waste of resources - seen from today's
perspective - put at the disposal of the regime thanks to
soaring gold prices and thanks to increasing foreign financing
until the mid 80s, served basically to put into practice the
survival strategy which left behind devastating results.
Already at the beginning of the 80s, mainly US companies began
to sell their businesses in South Africa. Towards the end of
1982, after the major western countries had once more opted to
grant credits to South Africa, the IMF was forbidden to grant
loans to South Africa if the institution failed to prove that
these resources were not used to perpetuate Apartheid. This
proof could not be delivered. On the other hand, foreign
banks, the most eager among them major banks from Germany and
Switzerland, organised long term loans worth several billions
of dollars for the Apartheid state. More comprehensive
financial sanctions were only imposed in 1985. Their effect
was, however, significantly reduced by several debt
rescheduling operations and by the striking loyalty of German
and Swiss bankers.
As is convincingly shown in Part I and in the attached
chronology, the decisive issue of the period from 1985 to 1990
was the intensification of Apartheid South Africa's war
against its neighbouring countries and against the South
African population. The transitional period from 1990 to 1993
was also characterised by a severe policy of internal
destabilisation and by the escalation of violence. Only well
into 1993 was the Apartheid regime prepared to comply with one
of the central conditions for the lifting of sanctions: the
holding of democratic elections according to the principle
The authors are convinced that sanctions and in particular the
financial crisis of the Apartheid regime in relation to
foreign creditors, played an essential role in getting the
regime to the negotiation table. Towards the end of 1989,
South Africa was faced with a serious financial crisis in
foreign relations. On the other hand, the Apartheid regime
used foreign credits as an opportunity to postpone
negotiations and to intensify its repression and war. Should
the young democratic state now be burdened with the repayment
of Apartheid-caused debts at the expense of urgent social
expenditure? The many organisations who have joined the
campaign clearly say NO.
Those who stuck to the regime by providing foreign finance are
to be considered accomplices. The paper therefore suggests
that either 1989 or 1993 be taken as the cut-off year for the
demands for debt cancellation and that profit transfers from
1985 to 1993 be considered as a reference for reparation
The most important financiers of the Apartheid state
Looking at long term debts, 90% are owed to four creditor
countries of the Apartheid regimes: the United States,
Germany, Switzerland and the United Kingdom. Up to 1992, the
US mainly held assets with public corporations and compared to
Switzerland and Germany much less assets with public
Furthermore, the research confirms that German companies and
banks were contributing significantly with direct and non
direct investments to maintain the Apartheid regime in power
and to prolong the suffering of the oppressed people.
According to estimates made by the author, the gains made with
their odious businesses amounted to 8.4 billion DM for the
period 1971-93 (not considering trade). This is dirty money,
for which compensation should be paid. Well-informed experts
on the South African economy and administration have again and
again asserted that during the critical phase of the late
1980s, the German and Swiss banks remained utterly loyal to
the Apartheid regime - with high risk increases on the
interest paid, though!
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC's primary
objective is to widen the policy debate in the United States
around African issues and the U.S. role in Africa, by
concentrating on providing accessible policy-relevant
information and analysis usable by a wide range of groups and